SOUTH BEND, Ind.--(BUSINESS WIRE)--1st Source Corporation (Nasdaq:SRCE), parent company of 1st Source Bank,
today announced record net income of $49.63 million for the year of
2012, an increase of 2.98% over the $48.20 million in 2011. The annual
net income sets a record as the highest in company history. Fourth
quarter net income was $12.35 million, up 10.41% compared to $11.18
million in the fourth quarter of 2011, due to higher mortgage banking
income along with reduced loan and lease collection and repossession
expenses.

Diluted net income per common share for the year was $2.02, an all-time
record and an increase of 3.06% over the $1.96 per common share a year
earlier. Diluted net income per common share for the fourth quarter was
$0.50, up 11.11% compared to $0.45 per common share reported in the
fourth quarter of the previous year.

At the January 2013 meeting, the Board of Directors approved a cash
dividend of $0.17 per common share. The cash dividend is payable on
February 15, 2013 to shareholders of record on February 4, 2013.
Dividends for 2012 increased 3.13% over the previous year and achieved
25 years of consecutive dividend growth.

Christopher J. Murphy, III, Chairman of 1st Source, commented, "In spite
of the rocky economy, 2012 was a good year for 1st Source Corporation.
We set a record for annual net income. We continue our record of 25
years of consecutive dividend growth which puts us in a very select
group nationally.”

“We also had a busy fourth quarter. New banking centers were opened in
Nappanee and Columbia City, Indiana; mobile banking and purchase rewards
for our checking account clients were rolled out; and 1st Source
Mortgage Express was introduced – a quick and easy online mortgage
application that is especially handy for our clients wishing to
refinance.”

“Credit continues to improve. Our 30 day delinquency rate ended 2012 at
0.16% of total loans and leases; our net charge-offs for 2012 were 0.13%
to average net loans and leases; while our net charge-offs in dollars
were $4.09 million compared to $8.36 million a year earlier. Credit
performance is strong, but our net interest margin is being squeezed. We
continue to focus on controlling expenses to compensate.”

“At 1st Source, we strive to be distinctively convenient, provide
straight talk and sound advice for our clients, and always keep their
best interests in mind – treating them in a very personal way. I am
proud of what my colleagues throughout the Bank have accomplished this
year. It is their focus and dedication to serving our clients well that
has led to our success.” Mr. Murphy concluded.

The net interest margin was 3.64% for the fourth quarter of 2012 versus
3.66% for the same period in 2011. The net interest margin was 3.69% for
the years ending December 31, 2012 and 2011. Tax-equivalent net interest
income was $39.00 million for the fourth quarter of 2012, compared to
$37.89 million for 2011’s fourth quarter. For the twelve months of 2012,
tax-equivalent net interest income was $153.84 million, compared to
$150.91 million for the twelve months of 2011.

As of December 31, 2012, the common equity-to-assets ratio was 12.28%,
compared to 11.98% at December 31, 2011 and its tangible common
equity-to-tangible assets ratio was 10.56% at December 31, 2012 compared
to 10.18% at December 31, 2011. Common shareholders’ equity was $558.66
million, up from $523.92 million a year ago. Total assets at the end of
2012 were $4.55 billion, up 4.04% from the same period last year. Total
loans and leases at December 31, 2012 were $3.33 billion, up 7.67%, and
total deposits at December 31, 2012 were $3.62 billion, up 2.96% from
the comparable figures at the end of 2011.

Reserve for loan and lease losses as of December 31, 2012 was 2.50% of
total loans and leases, compared to 2.64% as of December 31, 2011. Net
charge-offs were $0.98 million for the fourth quarter 2012, compared to
$2.17 million in the fourth quarter 2011. Net charge-offs for the full
year were $4.09 million in 2012 compared to $8.36 million in 2011. The
ratio of nonperforming assets to net loans and leases was 1.25% on
December 31, 2012, compared to 2.28% on December 31, 2011.

Noninterest income for the fourth quarter of 2012 was $20.57 million, up
1.52% compared to $20.27 million for the fourth quarter of 2011. The
fourth quarter increase was a result of higher mortgage banking income
and investment securities and other investment gains offset by lower
equipment rental income. For the year, noninterest income was $81.19
million, up slightly from the $80.87 million in 2011. The year-to-date
increase was due to higher mortgage banking income and insurance
commissions reduced by lower equipment rental income and investment
securities and other investment gains.

Noninterest expense for the fourth quarter of 2012 was $39.72 million,
down 2.62% compared to $40.79 million for the fourth quarter of 2011.
The leading factors for the fourth quarter decrease were reduced
depreciation on leased equipment and lower loan and lease collection and
repossession expenses offset by higher salary and employee benefits
expense. For the year ending December 31, 2012, noninterest expense was
$151.54 million, down from $152.35 million one year ago. The annual
difference was a result of reduced depreciation on leased equipment,
reductions to provisions for unfunded loan commitments, loan and lease
collection and repossession expenses, and lower net occupancy expenses.
These decreases wereoffset by increased salary and employee
benefit expenses and furniture and equipment expenses.

1st Source serves the northern half of Indiana and southwest Michigan
and is the largest locally controlled financial institution
headquartered in the area. While delivering a comprehensive range of
consumer and commercial banking services through its community bank
offices, 1st Source has distinguished itself with highly personalized
services. 1st Source Bank also competes for business nationally by
offering specialized financing services for new and used private and
cargo aircraft, automobiles for leasing and rental agencies, medium and
heavy duty trucks, construction and environmental equipment. The
Corporation includes 76 community banking centers in 17 counties, 9
trust and wealth management locations, 8 1st Source Insurance offices,
as well as 22 specialty finance locations nationwide. Celebrating 150
years, 1st Source has a history dating back to 1863. The Bank has a
tradition of providing superior service to clients while playing a
leadership role in the continued development of the communities it
serves.

In addition to the results presented in accordance with generally
accepted accounting principles in the United States of America, this
press release contains certain non-GAAP financial measures. 1st Source
Corporation believes that providing non-GAAP financial measures provides
investors with information useful to understanding our financial
performance. Additionally, these non-GAAP measures are used by
management for planning and forecasting purposes, including measures
based on “tangible equity” which is “common shareholders’ equity”
excluding intangible assets.

1st Source may be accessed on its home page at “www.1stsource.com.”
Its common stock is traded on the NASDAQ Global Select Market under
"SRCE" and appears in the National Market System tables in many daily
newspapers under the code name "1st Src". Except for historical
information contained herein, the matters discussed in this document
express “forward-looking statements.” Generally, the words “believe,”
“contemplate,” “seek,” “plan,” “possible,” “assume,” “expect,” “intend,”
“targeted,” “continue,” “remain,” “estimate,” “anticipate,” “project,”
“will,” “should,” “indicate,” “would,” “may” and similar expressions
indicate forward-looking statements. Those statements, including
statements, projections, estimates or assumptions concerning future
events or performance, and other statements that are other than
statements of historical fact, are subject to material risks and
uncertainties. 1st Source cautions readers not to place undue reliance
on any forward-looking statements, which speak only as of the date made.

1st Source may make other written or oral forward-looking statements
from time to time. Readers are advised that various important factors
could cause 1st Source’s actual results or circumstances for future
periods to differ materially from those anticipated or projected in such
forward-looking statements. Such factors, among others, include changes
in laws, regulations or accounting principles generally accepted in the
United States; 1st Source’s competitive position within its markets
served; increasing consolidation within the banking industry; unforeseen
changes in interest rates; unforeseen downturns in the local, regional
or national economies or in the industries in which 1st Source has
credit concentrations; and other risks discussed in 1st Source’s filings
with the Securities and Exchange Commission, including its Annual Report
on Form 10-K, which filings are available from the SEC. 1st Source
undertakes no obligation to publicly update or revise any
forward-looking statements.